openSAP

SAP Business Suite powered by SAP HANA

WEEK 2, UNIT 9

00:00:12 Welcome to second week of the openSAP course for SAP Business Suite powered by HANA.
00:00:17 You have chosen the unit about the Impact and Real-time Value of Suite on HANA for the Line
of Business Supply Chain.
00:00:24 My name is Richard Howells and I'm the Head of Go-to-Market for SAPs LoB Solutions for
Supply Chain and I will be the instructor for this unit.
00:00:34 Let's take a look at the high-level agenda for this session:
00:00:36 First, we'll cover some of the major business trends and challenges that affect companies'
supply chains, and how these trends and challenges have influenced the SAP Supply Chain
solutions today and moving forward.
00:00:49 Then, we'll delve into the four main areas of the SAP Value Map for Supply Chain
Management:
00:00:54 Supply Chain Monitoring, Integrated Business Planning, Demand-Driven Supply Chains, and
Logistics & Order Fulfillment.
00:01:03 So, first let's talk about the trends.
00:01:07 There are two major trends in the market which are here to stay.
00:01:11 First of all, we have very volatile markets compounded by growing Logistics complexity.
00:01:18 We're increasingly seeing the market power shifting to the end consumer.
00:01:23 The Millennial generation is always on, always connected, and wants individualized products
and services and of course, they want it now!
00:01:34 We're also seeing the growing middle classes in Emerging Markets, which is estimated to grow
to about 5 billion people over the next 5 years.
00:01:43 And this is resulting in a global rebalancing across all geographies.
00:01:48 These factors are leading to increased volatility but at the same time they represent extensive
growth opportunities for businesses if they have the tools in place to take advantage of them.
00:01:59 To master these high risks and rewards, we are now dealing with a global supply chain
network that has increased the Logistics complexity.
00:02:09 Volatile demand patterns require much more flexibility in the distribution networks.
00:02:14 At the same time, companies are introducing speedy replenishment services as a strategic
differentiator against their competition.
00:02:22 For example, Amazon have introduced a new distribution center strategy, which allows them to
deliver products ordered on their Web page within 2 hours in the Californian market.
00:02:32 Walmart have introduced processes to deliver directly from the closest store to the consumer,
when orders are placed online.

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00:02:41 So, these two major trends of volatile markets and growing logistics complexity require
businesses to adapt their supply chains to the new realities,
00:02:48 needing companies to transform their supply chains to demand networks.
00:02:56 Its all about the customer and its about the partners involved to fulfill the demand.
00:03:04 And in these demand networks, supply chain professionals are challenged to solve complex
problems in real time.
00:03:10 The biggest issue for supply chain professionals is to get the information they need to make
decisions.
00:03:16 According to a recent Aberdeen study, only 20% of supply chain professionals have the
information they need within a day.
00:03:21 This means an 80% either dont have the information or they get it too late.
00:03:29 And this results in the majority of decisions being made without any support from Supply Chain
Management solutions but based on experience and gut feeling of the supply chain
professionals.
00:03:39 The second challenge is to improve the planning results, especially short-term forecast
accuracy.
00:03:45 This is critical as forecast errors directly lead to excess inventory or stockouts.
00:03:53 Traditional forecasting algorithms are challenged because these algorithms tend to be very
good in the mid-term, but they result in short-term planning issues and short-term problems.
00:04:05 Predictive analytics are required with demand sensing capabilities to overcome these issues.
00:04:11 The third challenge is the orchestration of the partners which are involved in the fulfillment of
demand.
00:04:18 Typically, its a network of suppliers, outsource manufacturers, carriers, and logistics service
providers.
00:04:24 But it's been estimated that on average only 10% of suppliers are directly connected to their
customers with B2B connectivity.
00:04:33 This is because the administrative effort to onboard partners and train them is costly and
cumbersome.
00:04:41 Finally, keeping transportation and distribution cost under control is another major challenge.
00:04:48 This is of course in the context of growing logistics complexity and the requirements to
increase speed and to improve on-time delivery.
00:04:57 So we know that businesses need to transform their supply chains to demand networks, and
we also know that supply chain professionals deal constantly with complex issues.
00:05:09 So, what has SAP done to address this?
00:05:13 Well, we work very closely with thousands of innovative companies around the world to rethink
Supply Chain Management.
00:05:20 And what are the key requirements for a state-of-the-art supply chain?
00:05:24 We need to address the lack of visibility and provide end-to-end monitoring solutions. This
needs to go beyond the boundaries of the enterprise and also include visibility into customers

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and suppliers.
00:05:37 Furthermore, this needs to be combined with true real-time what-if simulation capabilities to
support the supply chain professionals.
00:05:44 We need to rethink planning and provide intuitive and predictive planning and response
management solutions.
00:05:52 This involves a mix of technologies, from Optimization to Simulation, and Predictive Analytics
is also necessary to solve todays complex challenges.
00:06:02 At the same time, the results need to be transparent and comprehensible.
00:06:06 Then we need an easier way to connect business partners and eliminate the heavy burden of
onboarding and offboarding constantly changing business partners.
00:06:16 This means a reliable and flexible business network for supply chain collaboration.
00:06:22 Finally, we need to provide a best-in-class supply chain execution environment, which provides
multi-modal and multi-role capabilities to flexibly adjust distribution networks most efficiently.
00:06:36 The new supply chain strategy enables businesses to transform their supply chains to demand
networks.
00:06:42 A demand network has the customer in the center of all processes, and connects all business
partners who are involved in fulfilling the demand on time at high quality and considering
efficiency and profitability goals.
00:06:56 The four key elements of a demand network we have identified are:
00:07:01 Supply Chain Monitoring to predict issues and ensure the integrity of the demand network.
00:07:06 Integrated Business Planning to balance demand plans with supply network constraints, and
to achieve efficiency and profitability goals.
00:07:15 A Demand-Driven Supply Network to sense and shape demand and orchestrate the
response by enabling a network of business partners.
00:07:21 And Logistics & Order Fulfillment to fulfill demand most efficiently by leveraging the
distribution network.
00:07:30 And of course, the demand network needs to be on SAP HANA for real-time and Big Data
management.
00:07:42 And how have we designed our solutions for Supply Chain?
00:07:46 Here, you see the SAP Supply Chain Value Map for Supply Chain Management. It is designed
the four main principles of a demand network.
00:07:55 (In the gray boxes:) Supply Chain Monitoring, Integrated Business Planning, Demand-Driven
Supply Networks, and Logistics & Order Fulfillment.
00:08:07 Let's take a closer look at these areas. At first, we'll talk about Supply Chain Monitoring.
00:08:16 The design of a demand network includes segmentation of customers, products, and suppliers,
which in turn builds the basis for efficiency, speed, and growth.
00:08:25 It also includes sustainability as a key principle to ensure compliance with regulations and
industry standards around such things as batch traceability, serialization, and food safety.

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00:08:37 And these processes need to be connected with real-time performance and alert management,
as well as the possibility to analyze the information and perform what-if simulations in real
time.
00:08:49 So, let's see a few examples of our Supply Chain Monitoring capabilities that are powered by
HANA.
00:08:56 First, we have Supply Chain InfoCenter, an analytical application for operational reporting on
SAP's Advanced Planning and Optimization data.
00:09:05 Supply Chain InfoCenter delivers best practice analytical capabilities based on demand and
supply planning data.
00:09:12 This includes both full and delta replication of the APO data for a snapshot and of near real-
time reporting and analysis.
00:09:20 An attractive user interface for operational reporting on planning data
00:09:27 A simplified approach for operational reporting.
00:09:29 And an easy-to-consume virtual data model that allows customers to develop their own reports
and analytical applications without the need to understand the complexity of the database.
00:09:41 It also requires easy consumption with state-of-the-art industry standards such as
BusinessObjects and Excel.
00:09:53 Next, we see SAP's Supply Chain Performance Management solution.
00:09:58 This solution leverages the Supply Chain Council's Scor model to create and display key
performance indicators in real time.
00:10:06 This enables the decisions and trade-offs to be made in full context of your business
performance objectives.
00:10:13 It also includes the ability to drill down into detailed cause-and-effect analyses as problems
arise.
00:10:20 You can simulate business scenarios to determine the outcomes of proposed
recommendations.
00:10:25 And because of the hierarchical nature of the supply chain KPIs, you can delve into the details
and the results as they cascade through the organization.
00:10:36 Another important area of Supply Chain Monitoring is the whole area of supply chain integrity
and the ability to track and trace products as they move through the business network.
00:10:48 The SAP Global Batch Traceability solution enables this by capturing and unifying product
batch genealogy and related tracking-object data from either a single or a distributed SAP ERP
and/or an SAP or non-SAP system.
00:11:10 You can answer questions such as How was this product created?, Which batches of which
materials went into each step of the manufacturing process?.
00:11:19 Which serial or log number was created for the finished product?.
00:11:32 And Which finished products did a specific batch of raw material go into?.
00:11:27 And in the worst-case situation of a product recall, Where else were these batches used or
sent to?.

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00:11:34 You can also track what other objects relate to the batch in question, such as the handling
units it was moved on,
00:11:41 the purchase order and associated suppliers that you bought it from, or the deliveries it was
shipped on.
00:11:50 Now let's take a look at Integrated Business Planning.
00:11:56 Clearly, Integrated Business Planning is a very broad area and the definition goes way beyond
supply chain.
00:12:02 It includes financial planning, marketing planning, sales planning, and human resource
planning. This presentation focuses on the supply chain view of Integrated Business Planning.
00:12:13 And a key component here of the Integrated Business Planning process is built around the
cross-departmental Sales and Operations Planning purpose (S&OP).
00:12:23 The purpose of S&OP is to balance demand and supply profitably to meet the strategic,
operational, and financial goals of the company in the mid to long-term planning horizon.
00:12:36 Another important step is to determine and optimize the quantity of safety stock and inventory
levels at each tier of the multi-tiered supply chain.
00:12:45 This is then used to drive planning, maximize customer service levels, and do this at as low a
cost as practical, and to minimize the working capital needs.
00:12:57 Finally, we need to drive collaborative demand planning and forecasting processes with
statistical modeling to provide a realistic picture of demand.
00:13:07 This enables supply chain managers to plan production and procurement across the network,
and to gain visibility into demand and supply fluctuations.
00:13:17 As I mentioned, the most widely used component of integrated business planning is SAP Sales
& Operations Planning (or S&OP).
00:13:25 The S&OP process aligns demand and supply to drive a business outcome, and is an
important enabler to power growth, improve resiliency, and drive efficiency improvements.
00:13:29 The SAP Sales & Operations Planning solution leverages the power of HANA to enable
planning on a unified model of demand, supply chain, and financial data,
00:13:49 and to analyze in real time at any level of granularity or dimension.
00:13:54 Decisions can be made faster through rapid solutions and comparison of scenarios on a
complete, detailed S&OP model.
00:14:04 And these decisions are inherently smarter by enabling collaborative processes through an
embedded, context-aware social platform to accelerate planning and decision making across
the company and inter-company boundaries.
00:14:22 Next, we need to introduce the Demand-Driven Supply Network.
00:14:30 To benefit from increased market volatility, a deep understanding about the market and the
customers is critical for success.
00:14:40 This means that the business needs market and customer intelligence to respond to
challenges, minimize risk, and maximize opportunities.
00:14:48 In industries like Retail, Wholesale, and Consumer Products, it is already the norm to leverage
Point-of-Sales (POS) information not only for marketing and sales purposes but also for

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replenishment processes.
00:15:02 But it's not only about POS data. You also need to access market research data and product
sentiments from social networks, and add this to the mix.
00:15:12 This enables a better insight about the markets, the customers, and the products at the most
granular levels.
00:15:18 Having the possibility to manage these massive amounts of data in real time and leverage it for
marketing, sales and replenishment processes is key to revenue growth.
00:15:33 One of the areas in this area is the Demand Signal Management powered by SAP HANA.
00:15:40 And this is a HANA-based solution that leverages Big Data from both structured and
unstructured sources.
00:15:46 With Demand Signal Management, you can accurately manage demand by aligning consumer,
promotional, and forecast data into one complete view of your demand.
00:15:58 You can track how demand is tracking for new product launches, flag problems, and take
corrective actions.
00:16:06 It's possible to incorporate structured and unstructured data, such as the market and
competitive intelligence, syndicated panel data, and social sentiment to get a more holistic
picture of demand.
00:16:18 Having this complete view of demand enables real-time visibility of both successful and
problem products, regions, and channels.
00:16:26 You can avoid out-of-stock situations and out-of-shelf situations to increase revenue and
customer satisfaction.
00:16:33 You can integrate the holistic demand view to drive planning, fulfillment, and execution
processes throughout the supply chain.
00:16:41 The next solution, Enterprise Demand Sensing, improves the quality of demand forecasts
within the short-term execution horizon in order to reduce stockouts in the short term, reduce
expediting costs, and ultimately boost sales.
00:16:58 It bridges the gap between long-term supply chain planning and actual order fulfillment, by
capturing historical forecast trends and service performance.
00:17:08 You can then compare and mathematically blend different forecast sources with demand
analytics.
00:17:17 SAP's Advanced Planning and Optimization has now also been optimized to utilize the high-
speed computational capabilities of HANA.
00:17:30 Time-consuming and performance-intensive processes have been identified to enable real-
time analytics for SCM planning scenarios, and to make planning faster and more responsive.
00:17:44 Process innovations within APO HANA include out-of-the-box analytical reporting to streamline
the data load.
00:17:53 Decision support based on near real information.
00:17:57 Predefined dashboards for different use cases for planning scenarios.
00:18:02 And Reporting on aggregate data is now possible, e.g., grouping by product families.

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00:18:10 SAP Supply Chain data on HANA enables customers develop their own reports and
dashboards, so that you can customize the look and feel of the information you wish to access.
00:18:23 We now also leverage HANA as the database to perform supply network collaboration.
00:18:29 This enables companies to collaborate quickly with suppliers, contract manufacturers, and
customers, and to improve decision support and planning processes.
00:18:39 You now have quick access to multi-tiered visibility into inventory and order status across your
extended supply chain.
00:18:47 You can incorporate vendor-managed inventory processes into demand signal processing on
large volumes of data.
00:18:57 Service Parts Planning is now also available leveraging HANA as a database.
00:19:02 In this environment, HANA can help optimize industry best practices to help speed up and
streamline all service parts planning processes.
00:19:10 You can rapidly synchronize parts planning with warehousing and fulfillment processes in real
time.
00:19:16 You also leverage the power of HANA for fast and accurate advanced parts forecasting and
inventory planning.
00:19:24 And the final area we'd like to look at is Logistics & Order Fulfillment.
00:19:31 Demand-driven networks put a huge pressure on the Logistics processes. Service levels and
cost need to be constantly balanced by considering global trade, sustainability, and multi-
modal transportation and distribution.
00:19:47 This in turn requires the elimination of silos between Transportation Management and
Warehouse Management.
00:19:52 SAP Supply Chain Execution covers the planning, orchestration, and execution of the physical
movements of goods.
00:19:59 Its a solution that connects the different participants of the value chain of Logistics:
00:20:05 Manufacturing companies that ship goods, freight forwards and carriers that provide logistics
services as well as the receivers of the goods, the consignees.
00:20:15 SAP has created a holistic Transportation Management solution for shippers and freight
forwarders companies of all sizes.
00:20:25 For companies with simple or complex environments, for high-volume operations that support
multi-modal transportation whether you have domestic or international transportation
processes.
00:20:37 And these processes are connected to Extended Warehouse Management, which covers
distribution centers and production warehouses for simple environments or complex, and high-
volume operations or low-volume.
00:20:53 With SAP's Transportation Management, a company can manage of all its transportation
needs and operations international and domestic for all modes of transportation.
00:21:04 There's built-in compliance with international trade and hazardous goods management
capabilities.
00:21:09 And capabilities include interactive transportation and shipment planning, integrated logistics

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and fulfillment management,
00:21:17 transportation execution visibility and monitoring, comprehensive freight cost management,
integrated freight and forwarding settlement.
00:21:27 And the solution makes pervasive use of contextual analytics, providing you with information
when you need it the most.
00:21:36 We also have mobile capabilities within the solution to transform your business partners,
regardless of their IT sophistication or support.
00:21:50 Extended Warehouse Management solution is designed to run all storage and fulfillment
processes.
00:21:57 EWM can run with your ERP on the same box, or can be deployed decentralized so that your
warehouse can operate when the ERP connection is down or busy.
00:22:09 Built-in optimization capabilities include wave management, labor management, and slotting.
00:22:15 It includes leading-edge warehouse technology integration, such as the ability to pick by voice,
radio frequency and RFID-enabled devices, and automation with warehousing equipment,
such as PLCs, conveyors, and optical sensors.
00:22:33 The solution also supports industry-specific requirements, such as batch management and
dangerous goods handling in the chemical industry,
00:22:41 kit to stock and kit to order in the automotive industry, and catch weight batch management
and best-before dates in the consumer goods industry.
00:22:52 In summary, SAP provides the broadest suite of supply chain solutions on the market today.
00:22:58 And the fact that they're powered by HANA enables the real-time paradigm to drive your
business based on actual demand.
00:23:05 Our Value Map for Supply Chain and our solutions are built to support the key businesses
processes,
00:23:11 from providing an end-to-end monitoring solution with real-time what-if decision support to
intuitive and predictive planning and response management solutions.
00:23:21 You can manage a flexible and reliable business network to collaborate with partners, and you
have industry-specific and best-in-class Logistics capabilities.
00:23:31 I encourage you to leverage our Solution Explorer to get the latest assets and references on
Supply Chain Management.
00:23:38 And that really concludes the presentation. Thank you for participating in the unit about the
Impact and Real-Time Value of Suite on HANA for the Line of Business Supply Chain.
00:23:49 Now you can do the corresponding assignments. After that, you are free to choose one or
more operational units covering other Lines of Business that are offered on this week's course.
Thank you!






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